Patent Reform Act of 2011 Is Passed by the Senate as “America Invents Act”

The Patent Reform Act of 2011 (S. 23) -- renamed the "America Invents Act" -- was passed by the Senate last week with little opposition. Unfortunately, this bill does not address the needs of the innovation community: inventors, small businesses and universities. American Innovators for Patent Reform (AIPR), a trade association dedicated to promoting innovation by strengthening the U.S. patent system, is opposed to the America Invents Act.

"The passage of the bill in the Senate may be viewed as a defeat by many inventors," observed Alexander Poltorak, founder and President of AIPR. "But let us not forget what this bill looked like when it was first introduced in 2007 and then re-introduced in 2009. The most damaging provisions of the proposed legislation -- apportionment of damages, raising the bar for proving willful infringement, limitations on venue, and requiring judges to act as 'gatekeepers' in determining damages -- were all removed from the bill thanks to the tireless efforts of many opponents of the original bill, a coalition of defenders of American innovation. This is no small accomplishment!"

"We thank all of our members and supporters who called their Senators to express their opposition to S. 23," said Alex Poltorak. "It was a grass-root effort by American innovators that made the difference."

"However, we are not ready to support this bill," continued Dr. Poltorak. "Its new name notwithstanding, the America Invents Act is still anti-inventor and anti-small-business legislation. The fight now moves to the House."

There are two problematic elements in the legislation that will hinder American innovation and weaken the U.S. patent system:

1. First-Inventor-to-File: AIPR and many other innovation and business groups were opposed to this proposed change to the traditional American patent system. Unfortunately, Senator Feinstein's amendment to remove this provision from the bill failed. Under this change, a patent would be issued to the winner of a race to the Patent Office instead of the first inventor. Furthermore, questionable language related to the exceptions to public use and on-sale bars may weaken the traditional U.S. grace period unless this language is clarified in the ultimate bill. AIPR believes these changes will result in a flood of patent applications as applicants rush to the patent office with half-baked inventions afraid of losing their priority date. This will further clog a Patent Office that already has a 700,000 patent application backlog!

2. Post-Grant Review: We already have two types of post-issuance reexamination procedures: ex partes and inter partes reexamination. Adding yet a third procedure by which an issued patent can be challenged is a dream-come-true for infringers. Under this ill-conceived provision of the America Invents Act, anyone can challenge a newly issued patent, forcing the patent owner to spend significant resources defending the patent. This expensive litigation-like adversarial procedure may prove to be unaffordable to many small entities, which may be forced to abandon their patents because they are unable to defend them. Instead of fixing an existing loophole in the ex partes reexamination, which allows anonymous requestors to keep a patent forever in limbo submitting petitions for reexamination in seriatim, the Senate enabled infringers to kill a patent before it can be enforced!

To be fair, due to passage of the Managers Amendment introduced by Senator Leahy in the beginning of the debate on the Senate floor, there are two positive provisions in the bill:

* Reduced Fee for Small Entities: Last year, the U.S. Patent and Trademark Office proposed to establish a "Three Tracks" patent application process that included expedited patent applications for those applicants who paid a fee for such a service. AIPR Executive Director Alec Schibanoff testified at a public hearing at the Patent Office, endorsing the general concept of an expedited patent examination option, but only if the fee were reduced for inventors, small businesses, universities and other small entities. The Invent America Act was amended to include a reduction of 50% in the fee that small entities pay for expedited examination. AIPR welcomes this reduction of fees for small entities.

* End to Fee Diversion: The U.S. Patent and Trademark Office (USPTO) is a self-funded federal agency that uses no taxpayer dollars and is funding from the fees it collects from patent applicants, owners and assignees. In the past, Congress gave the Patent Office a budget, and if it collected more than its budget in fees, the overage went into the general treasury. Quoting verbatim from a recent OpEd by Alexander Poltorak, Sen. Orrin Hatch (R., Utah) called this practice a "tax on innovation." The Managers Amendment included an end to fee diversion, enabling the USPTO to use all fees collected by the agency to fund its operations. However, this provision does not go far enough and does not call for the return to the USPTO of almost one billion dollars siphoned from it since 1992 for other government needs. It is a step in the right direction and it will at least stop the bleeding. AIPR will continue to push for full refund of moneys diverted from the Patent Office.

"The Patent Reform Act as passed in the Senate is a mixed bag," said Alec Schibanoff, Executive Director of AIPR. "On balance, it will do more damage than good, so we must oppose it."

AIPR urges the House of Representatives to call members of the innovation community to testify before the House Judiciary Committee and to craft an entirely new bill that addresses the areas of U.S. patent law that really need to be reformed!

About American Innovators for Patent Reform
American Innovators for Patent Reform (AIPR) represents a broad constituency of American innovators and innovation stakeholders, including inventors, engineers, researchers, entrepreneurs, patent owners, investors, small businesses, and intellectual property professionals such as patent attorneys, patent agents, technology transfer managers and licensing executives.

AIPR opposes any patent reform that weakens U.S. patent system, which is a driving force behind American innovation. AIPR advocates a multi-tier patent system, automation of the patent application process and synchronization of patent and copyright laws.

For more information about AIPR, please visit www.aminn.org

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